Potential E&S impacts and relevance of other IFC Performance Standards (PS) will further be evaluated as part of the E&S screening process of any additional sub-projects to be considered under IFC’s financing.                                                  

This is a Category A project as per IFC's Policy on Environmental and Social Sustainability, as the project activities have the potential to cause significant adverse E&S risks and/or impacts that are diverse, irreversible, or unprecedented. The proposed investment could involve the development of large-scale onshore wind and solar energy sub-projects in countries with high levels of biodiversity and which lack robust regulatory frameworks relating to aspects including biodiversity management, workers' rights and conditions, and land acquisition.

Key E&S aspects associated with the project are (i) adequacy of E&S assessments in line with IFC PSs; (ii) E&S capacity and ability to screen potential sub-projects suitability against E&S criteria; (iii) corporate and project-specific ESMS and review of sponsor's performance at the sub-project level; (iv) contractor E&S management; (v) labor and working conditions; (vi) noise and vibration; (vii) supply chain; (viii) land acquisition; (ix) potential biodiversity impacts; (x) cumulative impacts; (xi) stakeholder engagement and community grievance mechanism; (xii) potential for indigenous peoples (IPs) (Vietnam).

PS 1 - Assessment and Management of Environmental and Social Risks and Impacts

Iberdrola is implementing a General Sustainability Development Policy, approved by its Board of Directors (BoD) and aligned with the UN Sustainable Development Goals (SDGs) framework. Additionally, Iberdrola is applying a suite of E&S group-level policies focused on the environment and climate change, biodiversity, social commitments, and human rights. These policies are applicable to all of Iberdrola’s subsidiaries; however, an implementation timeline is not defined. Furthermore, Iberdrola has established a group-level Governance and Sustainability System structured around three pillars: environmental, social, and corporate governance. The system defines Iberdrola’s purpose and values and sets out a framework for implementing its sustainability strategy and continual improvement by applying consistent standards aligned with local requirements across all subsidiaries. Additionally, Iberdrola subsidiaries implement E&S policies and E&S management systems (ESMSs) tailored to the specific country and industry E&S risks. Some of these ESMSs are accredited with ISO 14001:2015 for environmental management.

As per ESAP#1, for all sub-projects to be developed, acquired, or refinanced utilizing IFC proceeds, the company will apply its group-level E&S policies within timelines specific to each sub-project. The company will communicate the policy requirements across its workforce. Furthermore, the company will establish project-level ESMSs for the projects under IFC financing, appropriate for the scale of its business, following the general requirements of IFC PS1, and bridging any gaps between company's corporate policies and IFC PSs. This ESMS will include relevant plans/procedures applicable to the design, construction and operational activities in sub-projects to form part of IFC proceeds per IFC's PSs and WBG EHS Guidelines. In the future if the company is to acquire or refinance a sub-project within IFC proceeds with an existing ESMS, a gap analysis between current practices and IFC PSs and WBG EHS Guidelines will be completed, and any identified inconsistencies will be addressed (ESAP#1). 

Relating to the three sub-projects (Poldasek, Wolka Dobrzynska, Korytnica II) identified for IFC financing, the company will develop and implement Operations Environment & Social Management Plans (OESMP) consistent with the project EIA, IFC PS, WBG EHS Guidelines, and national requirements. The OESMPs will include a ‘Commitments Register’ as an annex, consolidating and assigning responsibility for all E&S commitments contained within the sub-projects Environmental Impact Assessments (EIAs), approvals, and licenses and any actions required, based on the outcome of E&S monitoring and any additional studies to ensure the sub-projects comply with IFC PSs (ESAP#1).

Iberdrola, via its subsidiaries, conducts Environmental and Social Impact Assessments (ESIAs) for its projects as required by national law, and E&S risks and associated impacts are addressed through compliance with applicable national E&S regulations. As per ESAP#2, the company will develop and implement an E&S screening, due diligence, and risk and impact assessment procedure (to identify, assess, and manage relevant E&S risks and impacts of acquisitions and new assets) in line with IFC PSs for all sub-projects where IFC proceeds will be used. The procedure will include a) process to screen potential project locations and exclude those located within environmentally and socially sensitive areas (including internationally recognized areas) and not meeting project eligibility criteria; b) an Indigenous Peoples Framework to guide the screening and identification of Indigenous Peoples (IPs) and the implementation of measures defined within IFC PS7, as applicable; c) the requirement to conduct IFC PSs compliant ESIA (including stakeholder engagement, and consultation and adequate biodiversity and social surveys and assessments) before the start of construction and implement the mitigation hierarchy in line with IFC PSs. If, in future, Iberdrola is to acquire an operational asset in which an EIA/ESIA has been completed before the acquisition, the procedure will define the requirement to conduct a gap analysis identifying material differences between the EIA/ESIA and the IFC PSs. If material differences are identified, a supplemental action plan will be implemented to address differences and ensure that the sub-project complies with the IFC PSs. EIA/ESIAs for all sub-projects utilizing IFC proceeds, will be publicly disclosed by IFC via its disclosure website, and by the company.

The E&S Screening procedure will include terms of reference (ToR) for an ESIA defining the minimum requirements to ensure consistency with IFC PSs requirements and relevant WBG EHS Guidelines. The ToR will specify the scope for adequate environmental and social baseline studies, stakeholder engagement and consultation, and impact assessment, including such aspects such as physical and economic displacement and livelihood restoration; impacts on ethnic minorities and indigenous peoples or cultural heritage; cumulative impacts, resource efficiency and pollution prevention,  community health, and safety; and biodiversity (fauna, flora, and natural habitats) to classify the project habitat (modified,  natural) and evaluate the potential presence of Critical natural habitat (as defined in IFC’s PS6) and its qualifying triggers (ESAP#2).

At a group level, responsibility for E&S management resides with Iberdrola’s Head of Global Environmental, Social, and Governance (ESG), who leads a team of 26 specialists covering environmental, social, human rights, and sustainability aspects. The Head of Global ESG chairs an ESG sub-committee that reports to Iberdrola’s BoD. Additionally, Iberdrola subsidiaries have their own E&S teams. As per ESAP#3, Iberdrola’s subsidiary IEI will engage an E&S Manager with significant experience working within emerging markets and a detailed knowledge of IFC PSs, to ensure oversight of all assets financed with IFC proceeds. Additionally, the company will provide all sub-projects with sufficient E&S resources to comply with national regulations and IFC PSs. 

Iberdrola typically avoids sub-projects that require involuntary displacement or when there are unclear land rights titles. Relating to the three sub-projects preliminary identified for IFC financing, land utilized by the projects is under long-term lease agreements, which comply with national regulations. Micrositing of turbines was possible in the event of land issuer disagreements. As per ESAP#4, the company will develop a Land Acquisition and Resettlement Framework aligned with PS5 to be applied across all sub-projects utilizing IFC proceeds. The framework will include guidelines for community engagement and consultation, the establishment of a grievance mechanism, avoiding forced eviction, compensating assets at replacement value, and developing ‘Resettlement Action Plans’ or ‘Livelihood Restoration Plans’ in case the E&S screening and assessment identifies the need for involuntary physical or economic displacement. 

As part of the sub-projects ESMSs (ESAP#1), E&S monitoring programs will be developed for the construction and operational phases of sub-projects, including monitoring frequency, performance indicators, and targets. Furthermore, per ESAP#5, the company will undertake annual onsite E&S monitoring of each sub-project utilizing IFC proceeds to assess adherence with applicable local E&S laws, Iberdrola’s corporate policies, and IFC PSs and WBH EHS Guidelines. If the assessment identifies any compliance gaps or the need for mitigation measures, these will be implemented.

To manage E&S risks related to procurement and supply chain, Iberdrola has developed formalized processes, including vendor prequalification and selection procedures, E&S risks assessments, and a Code of Conduct, which defines Iberdrola’s E&S commitments (including commitments relating to labor practices and human rights). Iberdrola incorporates these commitments into the contracts it signs with its suppliers.

PS 2 – Labor and Working Conditions

As of June 2023, the group employed approximately 40,721 employees, of which 76% are men and 24% are women. In Poland, where the three sub-projects preliminary identified for IFC financing are located, Iberdrola currently has 26 employees, with plans to increase resources within 12 months.

Iberdrola has group-level Human Resources (HR) policies, which are generally aligned with IFC PS2, and cover aspects such as hiring, rights, obligations (including non-discrimination and equal opportunities), freedom of association, and working conditions. The principal documents regulating labor-related issues include a People Management Policy and an Equality, Diversity, and Inclusion Policy. Additionally, Iberdrola implements a Policy on Respect for Human Rights which explicitly makes commitments rejecting forced labor, respecting freedom of association and collective bargaining, and non-discrimination. These policies apply to all companies of the group and to all investees not belonging to the group over which Iberdrola has effective control within limits established by law. Additionally, Iberdrola subsidiaries establish country- or asset-specific, equivalent policies aligned with the group-level policies' principles and comply with local regulatory requirements.

Iberdrola’s human resources processes include a group-level whistle blower channel managed by Iberdrola’s compliance unit, aligned with its’s Ethics Policy. This process is available to all Iberdrola employees globally, sub-contractors and suppliers. As per ESAP#6, the company will establish a Worker’s Grievance Mechanism (WGM) following national and IFC's PS2 requirements to be implemented on each sub-project in which IFC proceeds will be used. The WGM will be made available to all project workers, irrespective of their employer. The company will disseminate information and provide ongoing training about its use to the workforce, including contractors and subcontractors (in a language the workers understand). The WGM shall include specific considerations related to gender-based harassment/violence (GBV) grievances. It will consist of multiple entry points to raise and address allegations, including options to report anonymously if preferred. The company will appoint an adequately trained grievance officer (including relevant training addressing GBV related grievances) to coordinate the implementation of the WGM.

Iberdrola has a corporate Occupational Health and Safety Management System (OHS MS) accredited with ISO 45001, based on an Occupational Safety and Health Policy that has been approved by the company’s BoD, which defines OHS principles and commitments made by senior management and promoted at all organizational levels. At the project level, Iberdrola contractually requires its contractors/sub-contractors to adhere to its 'OHS Minimum Requirements' and develop and implement a site-specific OHS MS, including plans and procedures of a scale appropriate to their scope of work. Iberdrola assesses the adequacy of their contractors/subcontractors OHS MS and ensures any identified deficiencies are addressed before site mobilization. All workers complete basic OHS training, and supervisory staff and employees undertaking high-risk activities complete specific OHS training.

Iberdrola utilizes contractor/sub-contractor companies during the construction and operation of their renewable energy assets. For all sub-projects where IFC proceeds will be used, as part of their ESMS (ESAP#1), the company will develop a Contractor Management Plan defining their approach to managing the E&S performance of their contractors, subcontractors, and other third parties during the various phases of the project. The contractor management approach will be consistent with the general principles described within IFC Good Practice Note: Managing Contractors' Environmental and Social Performance.

PS 3 - Resources Efficiency and Pollution Prevention

Pollution generated during the construction and operation of renewable energy projects is generally minor and readily mitigated through standard pollution prevention and control measures. For all sub-projects utilizing IFC proceeds, the company will require its contractors/subcontractors to comply with all environmental license conditions,  the requirements of project-specific ESIAs and ESMSs, IFC PSs and WBG EHS Guidelines (ESAP#1 and 2), covering such aspects as fugitive dust from earth-moving activities, noise and exhaust from construction machinery; sanitary effluents from worker facilities (typically disposed of via septic systems), and non-hazardous and hazardous solids wastes (typically disposed of through registered contractors or at the local waste disposal facilities in the case of non-hazardous wastes), as applicable.

Volumes of liquid, solid, and hazardous waste generated by sub-projects during operations are expected to be low. Risks and impacts related to water use, community water availability and water efficiency will be assessed and managed for each future sub-project in which IFC proceeds will be used as per ESAP#2. Water will only be sourced from appropriately permitted sources. For the three sub-projects preliminary identified for IFC financing, an assessment of potential operational impacts (noise and shadow flicker) was completed as part of the national EIAs. Based on this assessment, potentially significant effects on sensitive receptors were not anticipated. However, this assessment's methodology is not fully aligned with IFC guidelines. As per ESAP#7, the company will reassess shadow flicker and noise impacts utilizing an assessment methodology aligned with WBG guidelines. The shadow flicker assessment shall identify sensitive receptors in line with the definitions in the relevant EHS Guidelines, and explicitly confirm that flicker effects do not exceed 30 hours per year and 30 minutes per day on the worst affected day, based on a worst-case scenario. The noise assessment shall identify sensitive receptors and include day & night monitoring and specifically confirm no exceedance of 45dB nighttime criteria at sensitive receptors. If either assessment identifies the need for mitigation measures, these will be implemented. For all future sub-projects considered for IFC proceeds, the company will ensure that operational impacts are mitigated and managed in compliance with national standards, IFC PS and WBG EHS Guidelines.

PS 4 - Community Health, Safety, and Security

Risks and impacts to host communities of sub-projects and the public will be individually assessed during the ESIA process (as per ESAP#2). Based on the findings, appropriate mitigation measures will be defined and implemented during the design, construction and operation of each sub-project.

The ESIAs that will be conducted for wind sub-project (as per ESAP #2) will assess safety risks (i.e., blade and ice throw) and establish safety buffer zones around turbines if required. Appropriate mitigation measures will be defined, including installing warning signs and active engagement to inform local people of the dangers posed by the project. For the three sub-projects preliminary identified for IFC financing, no households are located within the safety buffer zone of each turbine (defined as 1.5 times the length of the WTG blade [tower, plus rotor radius], approximately 260 m) or the overhead transmission lines, and no communities are living within the project site. However, these sub-projects are situated in active agricultural areas. As per ESAP#8, the company will reassess ice and blade throw risks using a methodology aligned with WBG EHS guidelines and GIIP. Areas of potential ice and blade throw will be calculated, and potential receptors identified based on worst-case scenarios, and management measures shall be developed and implemented to manage identified risks.

Similarly, if solar sub-projects are to be developed utilizing IFC proceeds, the ESIA process will define measures to minimize potential adverse impacts on local communities. Electrical equipment will be fenced, and cables insulated to avoid any electrical hazards. Access to agricultural fields, villages, communities, and their networks will not be disrupted/hindered. The main road traffic risk associated with the sub-projects is related to transporting solar and wind components (PV panels, turbines, blades, and wind tower components) to project sites from vendor facilities. Additional risks relate to transporting other construction materials and the project personnel. Risks associated with this transport will be assessed within the sub-project ESIAs. As per ESAP#2, applicable control measures to protect local community members from road traffic accidents, in line with GIIP, will be defined in each sub-project ESIA and implemented by the company and its contractors/sub-contractors. If green hydrogen projects are to be developed utilizing IFC proceeds, associated risks, including OHS and community safety aspects associated with the handling of hydrogen gas will be assessed.

Iberdrola has group-level policies focused on Security and Human Rights which are to be applied to all their subsidiaries. Additionally, as part of ESMSs developed for sub-projects utilizing IFC proceeds (ESAP#1), the company will develop and implement a Security Management Plan aligned with IFC PS4 and the Voluntary Principles of Security & Human Rights. The plan will include a Code of Conduct for site security personnel, a security risk assessment and incident reporting, and an investigation process. The sub-project's community grievance mechanism will be available for members of the community or employees in the event of a violation of the code for security personnel or other grievance related to security personnel. 

PS 6 – Biodiversity Conservation and Sustainable Management of Living Natural Resources

As per ESAP#2, provisions to mitigate impacts to biodiversity (fauna, flora, and natural habitats) and achieve No Net Loss or Net Gain, as applicable, depending on the classification of habitat in line with PS6 at each sub-projects, will be individually assessed during the ESIA process. Based on the findings, appropriate mitigation measures will be defined and implemented during the design, construction and operation of each sub-project.

Wolka Dobrzynska, Podlasek, and Korytnica II WPPs are all situated in the Central European mixed forests ecoregion of the temperate broadleaf and mixed forests biome (as designated by the Worldwide Fund for Nature, WWF).

Wolka Dobrzynska WPP was built in Modified Habitat and used for agricultural purposes. The nearest protected area is Podlaski Przelom Bugu Landscape Park (IUCN Category V), within 2 km of the WPP to the northeast, which is adjacent to the overlapping protected areas of Bug River Protected Landscape Area (IUCN Category V), Lower Bug River Valley KBA/IBA and Dolina Dolnego Bugu SPA, at about 7 km to the east. Based on field surveys conducted by the sub-project, priority biodiversity values are migratory species, including the Montagu’s Harrier, Western Marsh-harrier, Hen Harrier, White Stork, European Honey Buzzard, White-tailed Sea-eagle (all IUCN Red List – LC). Species were recorded at low occurrences. Although the project is in Modified Habitat, IFC Natural Habitat No Net Loss (NNL) requirements will apply to these priority biodiversity values, given the potential risk for collision.

Podlasek WPP was also constructed in Modified Habitat. Except for a Red Alder plantation of less than 1 ha in the eastern section, the entire sub-project area had been used for agriculture. The closest protected areas are Jeziora Gorynskiego Protected Landscape Area and Skarlinski Protected Landscape Area, located approximately 3 km to the north and 5 km to the south of the sub-project, respectively. Based on bird nesting and flight activity data collected by the sub-project, priority biodiversity values include the migratory Northern Lapwing (IUCN Red List – Vulnerable), Lesser Spotted Eagle (IUCN Red List – Least Concern, Poland Red List – Vulnerable), Common Crane, White Stork, White-tailed Sea-eagle Western Marsh Harrier, Montagu’s Harrier, European Honey Buzzard, Black Kite, Common Kestrel, and Eurasian Hobby (all IUCN Red List – Least Concern). Of these priority birds, the Northern Lapwing, Common Crane, White Stork, and Lesser Spotted Eagle had higher occurrences, while the other species were recorded at low occurrences. Other priority biodiversity values include bat species identified in the area, which are Vulnerable according to the Poland Red List. Of these bat species, Common Pipistrelle and Nathusius’ Pipistrelle (both IUCN Red List – Least Concern, Poland Red List – Vulnerable) were the most frequently recorded species during seasonal migration. IFC Natural Habitat No Net Loss (NNL) requirements will apply to all of these priority biodiversity values, given the potential risk for collision.

Korytnica II WPP is also located in lowland cropland in Modified Habitat. The sub-project is approximately 5 km to the south-southwest of Liwiec River Valley KBA/IBA, which overlaps with Dolina Liwca SPA. Priority biodiversity values identified at the sub-project area include the migratory Merlin (IUCN Red List – LC, European Red List – VU), Tundra Swan (IUCN Red List – LC, European Red List – VU), Lesser Spotted Eagle (IUCN Red List – Least Concern, Poland Red List – Vulnerable), Whooper Swan, Mute Swan, White Stork, Black Stork, Great White Egret, Grey Heron, Common Crane, Eurasian Golden Plover, Northern Lapwing, Montagu’s Harrier, Western Marsh-harrier, Hen Harrier, Eurasian Hobby, European Honey Buzzard, Rough-legged Buzzard, Black Kite, Common Kestrel, and Eurasian Sparrowhawk (all IUCN Red List – LC). The Eurasian Golden Plover, European Honey Buzzard, Rough-legged Buzzard, and Eurasian Sparrowhawk occurred in relatively higher frequencies, while the other species had low occurrences. Other priority biodiversity values are bat species, which include the Lesser Horseshoe Bat (IUCN Red List – Least Concern, Poland Red List – Endangered) and other recorded bat species that are Vulnerable according to the Poland Red List. IFC Natural Habitat No Net Loss (NNL) requirements will apply to all of these priority biodiversity values, given the potential risk for collision.

For all three sub-projects, the key measure will be developing a robust fatality monitoring program that follows GIIP and can accurately generate unbiased fatality rate estimates. For this reason, as indicated in ESAP#9, for these three sub-projects and for any future WPP sub-projects to be developed utilizing IFC proceeds, the company will contract a specialized wind-wildlife consultancy to design and implement a Post-Construction Fatality Monitoring (PCFM) program. The PCFM program will, at the minimum, include (i) systematic carcass searches conducted at weekly intervals year-round under all turbines with 6-m transects, (ii) implementation of an adequate number of industry-standard bias correction measures for searcher efficiency (detectability), carcass removal (scavenging), and unsearched and unsearchable areas, (iii) industry-standard statistical calculation of total, bias-corrected bird and bat fatality using GenEst software on a semi-annual (2x/year) basis. The program will take place for at least a three-year period with semi-annual reporting following a standardized template, but the actual timeframe of the PCFM program will depend on fatality results. A strategic review of the PCFM program will take place 2.5 years after implementation.

In addition to the PCFM program, for all WPPs sub-projects utilizing IFC proceeds, the company will develop an operations phase BMP (ESAP#10), which will include the following: i) confirmation of priority biodiversity values based on PCFM results (and any other new regional data available); ii) threshold setting for priority biodiversity values following the potential biological removal method; and iii) an adaptive management strategy. As per the adaptive management strategy, if the review identifies that any of the defined thresholds are exceeded, the company will take additional mitigation measures, including observer-led shut-down on demand (e.g., birds) and curtailment (e.g., bats), in consultation with IFC.                                                

 Stakeholder Engagement:

Iberdrola has a group-level Stakeholder Engagement Policy that outlines the basic principles for identifying and engaging stakeholders. Iberdrola further implements a Global Stakeholder Engagement Model, which details guidelines to develop engagement procedures based on impacts and their ability to influence the company. The model defines processes for identifying and mapping stakeholders that are grouped and prioritized based on their level of influence on Iberdrola’s operations. A stakeholder mapping exercise is then used to establish the necessary level of interaction with each group and the most appropriate channels, frequency, and methods to inform and consult them. Furthermore, Iberdrola implements a Human Rights Policy and Public Community Consultations Procedure, which guides their project teams when conducting public consultations and engaging with local communities. Iberdrola operates a corporate-level external grievance mechanism generally aligned with IFC PSs.

Iberdrola has yet to fully implement the policies mentioned above across the three sub-projects preliminary identified for IFC financing. As per ESAP#11, for all sub-projects to be developed utilizing IFC proceeds, the company will apply its Global Stakeholder Engagement Model and associated corporate policies before commencing site activities. Furthermore, the company will develop and implement project-level Stakeholder Engagement Plans (SEP) to meet PS1 requirements, including a formal grievance mechanism to include key performance indicator reporting and a grievance log for external stakeholders / affected communities. The SEP will include clear commitments to implementing a zero toleration to any retaliatory actions against those who raise grievances. The SEP will be periodically reviewed and updated. The company will appoint a suitably qualified staff member to implement the SEP and disclose information about the project's main environmental and social impacts.